South Downtown Atlanta is on Fire (Again) with $10B in New Developments
In 1864, General William T. Sherman burned Atlanta to the ground, including the area around the Zero Mile Post marking the terminus of the Western & Atlantic Railroad.
Now, 155 years later, South Downtown is on fire again but this time, it is as one of the hottest development submarkets in the Southeast. With the still-active downtown rail yards at its center, more than $10 billion in new development is either completed, under construction or in the planning stages.
This “Downtown Ring of Fire” stretches from Centennial Olympic Park and Mercedes-Benz Stadium to Castleberry Hill and over to Underground Atlanta. The project SSG Realty Partners recently brought to market, Artisan Yards, is a 9.9-acre site at the intersection of Ted Turner Drive (historic Spring Street) and Whitehall Street. It is currently the headquarters of Gourmet Foods International, which has outgrown the property and is relocating to a new facility.
The primary catalyst for this significant new development momentum is the $1.6 billion Mercedes-Benz Stadium, home of the Atlanta Falcons and the 2018 MLS Cup champions Atlanta United. The $192 million renovation of State Farm Arena and the $25 million expansion of Centennial Olympic Park were also critical in creating the momentum in South Downtown.
Other projects underway in the area include the Signia Hilton Atlanta, a 30-story, 1,000-room hotel between the Georgia World Congress Center and Mercedes-Benz Stadium; and the $37.5 million, 195-room Reverb by Hard Rock Hotel in Castleberry Park, which will include multiple retail stores, about 130 apartments and a small park.
Stream Realty Partners and CIM Group are transforming the former Norfolk Southern Atlanta headquarters on Ted Turner Drive into a $70 million, 280,000-square-foot adaptive-reuse project. Plans call for six or seven retailers, about 50,000 square feet of offices and hundreds of new residents. Now called Freight House, it will link downtown and Castleberry Hill.
Two other transformative projects are South Carolina-based WRS’ acquisition of Underground Atlanta and German-investor Newport US RE’s purchase of more than 47 histor-ic buildings along Peachtree, Mitchell and Broad streets.
In the case of Underground Atlanta, plans call for a $300 million blend of apartments, student housing and retail. The historic property originally opened in 1969 as a 12-acre “city beneath the streets,” a 225,000-square-foot shopping and entertainment district.
Newport plans to invest as much as $500 million to renovate the more than 1 million square feet of existing space over Underground that it has acquired in an eight-block area south of the Five Points MARTA station.
Then there is The Gulch, 40 acres of parking lots and rail lines below the surrounding viaducts. CIM Group is in the process of rebranding the area as Centennial Yards. The $5 billion mini-city could consist of 8 million square feet of office space, 1,000 residences, 1,500 hotel rooms and a regional mall’s worth of retail space.
Essential to this boom are public-private partnerships. According to published reports, more than $2.7 billion of public funding has gone toward or been pledged to the devel-opments within South Downtown. Mercedes-Benz Stadium received $200 million in City of Atlanta bonds backed by the city’s hotel-motel taxes. State Farm Arena, which is owned by the city, was backed by $142.5 million in public funding through an extension of the city’s rental car tax.
City and state public incentives for the $5 billion Gulch redevelopment could reach $1.9 billion. Meanwhile, $400 million in city bonds were used for the Georgia World Congress Center expansion and the development of the 1,000 room Signia Hotel.
There is little question South Downtown is on fire again because developers see the potential in the area around which Atlanta originally grew, and city and state leaders are investing public funds to spur significant activity in this previously neglected corridor.
— By Peyton Stinson, Director, Strategic Land Group, SSG Realty Partners. This article originally appeared in the August issue of Southeast Real Estate Business.